ITTOIA/S850C(2)(b), (3)(c)(ii) and (9)

The excess profit allocation rules only apply where it is reasonable to suppose that the “relevant tax amount” is lower than it would have been had the profit shares not been diverted from the individual member to a non-individual member.

The relevant tax amount is the tax that would have been payable by:

the individual on the profit share that they were allocated; and

the non-individual partner on the profit share, as originally allocated.

The relevant tax amount does not include any potential tax on the potential payment or distribution from the non-individual partner to the individual.